Study Notes

Handling Economic Data: Real Disposable Income and Real Per Capita Incomes

AQA, Edexcel, OCR, IB

This brief study note (and supporting video) looks at the difference between real Disposable Income and real Per Capita Incomes.

Real GDP Per Capita = Real income per head of population

Real per capita incomes is often taken as a benchmark for improvements (or a worsening) in the average real living standards of the population.

Real Disposable Income = Household income after the deduction of taxes and the addition of benefits.

Real disposable income is an important measure of people's purchasing power in the economy after the effects of the tax and benefits system have been included. In recent years real disposable incomes have grown only slowly in part because of welfare cuts and tax increases but also because of the slow growth of wages in the labour market.

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